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The Challenge of Leading Digital Platforms in Responsible Ways

March 23, 2017 • TECHNOLOGY, SUSTAINABILITY & ETHICS, David De Cremer on Management, Social Impact

By David De CremerJess Zhang, and Leander De Schutter

Digital platform businesses are increasingly being confronted with a host of unethical consequences due to a lack of responsible leadership and regulation. In this article, the authors identify several opportunities to enhance your companies’ ethical leadership in the context of digital platforms.

 

Innovation is crucial to any successful business in today’s economy. Most successful businesses nowadays achieve growth by creating new value and a greater level of well-being for a variety of stakeholders. Interesting is that those companies usually employ the latest technologies that enables them to work in fast and open ways. Examples of such companies are Amazon, Apple, PayPal, Alibaba, and Airbnb. What is common to all these companies is that their business is concerned with information exchange that is built on digital platforms. Platforms enable value-creating interactions between different parties (e.g. customers and suppliers) and the use of the digital economy allows for greater efficiency and lower operating costs. These platform business models can be qualified as innovative in itself as they expand markets by bringing together knowledge flowing from different parties. 

As with any business strategy that is new, revolutionary and aimed at raising growth quickly, the focus of platforms is directed primarily towards the product itself and less so at the possible long-term consequences at the societal level. This truth is especially the case for digital platforms, whose product focus is on working with information. As we all know, those who have information also have power. It is therefore suggested that with great power also comes great responsibility. For that reason, it goes without saying that ethics is a fundamental element of how platforms work and deal with information. But is ethics managed well in this digital economy age?

As was the case with financial markets, today’s businesses making use of digital platforms also seem to embrace a certain type of Adam Smith’s “invisible hand”. In other words, creating the platform is seen as the responsibility of the company whereas regulating its workings is more an issue of the platform users. Unfortunately, as the financial crisis showed that the invisible hand is more a fantasy than reality, in a similar way, digital platform businesses are increasingly being confronted with a host of unethical consequences due to a lack of responsible leadership and regulation. Take for example the following incidents happening in the two biggest economies in the world.



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